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Gränsöverskridande koncernavdrag

The Swedish government has in July 2010 incorporated a legislation regarding the possibility to deduct a loss incurred by a non-resident subsidiary, from the parent company’s taxable income. This Law is based on the Swedish administrative court’s interpretation of the European Union Court’s judgement of the Marks & Spencer case and the Oy AA case. The law is in my opinion not completely compatible with Union law. This essay will analyse the law, pointing out its flaunts and failures but also to what extent it is compatible with Union law, with background to the Marks & Spencer case, the Oy AA case and the cases from the Swedish administrative court with their interpretation of the European Union cases.
I found that the newly incorporated... (More)

The Swedish government has in July 2010 incorporated a legislation regarding the possibility to deduct a loss incurred by a non-resident subsidiary, from the parent company’s taxable income. This Law is based on the Swedish administrative court’s interpretation of the European Union Court’s judgement of the Marks & Spencer case and the Oy AA case. The law is in my opinion not completely compatible with Union law. This essay will analyse the law, pointing out its flaunts and failures but also to what extent it is compatible with Union law, with background to the Marks & Spencer case, the Oy AA case and the cases from the Swedish administrative court with their interpretation of the European Union cases.
I found that the newly incorporated Swedish law is not just stretching the boundaries set up by the European Union court, but it also legislates on matters not discussed by the Court. For example the Marks & Spencer case does not discuss or clarify matters of the size of the deduction, the currency to be used for the deduction or under which country’s law the deduction should be calculated. But the new law legislates on these matters. Also parts of the legislation are contradictory to the principles set out by the Court in the Marks & Spencer. The main principle of the Marks & Spencer being that if a subsidiary has exhausted all local remedies to make use of the loss, and still has not been able to do so, the parent company may deduct the loss of the foreign subsidiary, from its own taxable income.
The essay starts out with a brief summary of the Marks & Spencer case, as well as the Oy AA case. The legislation as well as the rulings of the Swedish administrative court will also be briefly summarized. The situation post-Marks & Spencer but pre-legislation will also be discussed to see what potential effects the legislation has. A short prognosis of the legislation will tie up the summary further on in the essay. Some of the predictions I make include the fact that this legislation will not suffice in the European state with the European market progressing as it is. The new legislation is in part discriminatory to the four freedoms established by the former Rome treaty and now in the Lisbon treaty as the legislation makes it less attractive to set up a parent company or a subsidiary company in Sweden.
Furthermore I found that the new Swedish legislation on deducting losses of a foreign subsidiary is not just stretching the boundaries set up by the European Union court, but it also legislates on matters not discussed by the Court. Also parts of the legislation are contradictory to the principles set out by the Court in the Marks & Spencer. In what I have called group three of the Swedish administrative courts judgements, I have summarized and analysed cases that are about a subsidiary wanting do deduct losses because the law in that particular state claims that a loss can only be set forward to be deducted from next year’s profits, for a maximum of five years. The court decided that it was not up to the Swedish nation to heal another
country’s “sick” law. This I find is contradictory to the Marks & Spencer case because if the subsidiary can prove that it has done all it can make use the loss for those five years, they have exhausted all local remedies and thereby this makes their loss deductible according to European standards.
Since the legislation came to be, The Lisbon treaty has replaced the former Rome treaty. The essay will also include a comparison of the two treaties to appreciate if the former Community law has changed with the onset of Union law. This is an important aspect of this essay because if the Union law differs from Community law, the relevance of the Marks & Spencer and the guiding principles that were derived from it would be null-and-void. After comparing these with each other I found that this was not the issue and that the community law discussed in the court rulings had been left unaltered with the onset of union law. (Less)

@misc{3167319,
abstract = {The Swedish government has in July 2010 incorporated a legislation regarding the possibility to deduct a loss incurred by a non-resident subsidiary, from the parent company’s taxable income. This Law is based on the Swedish administrative court’s interpretation of the European Union Court’s judgement of the Marks & Spencer case and the Oy AA case. The law is in my opinion not completely compatible with Union law. This essay will analyse the law, pointing out its flaunts and failures but also to what extent it is compatible with Union law, with background to the Marks & Spencer case, the Oy AA case and the cases from the Swedish administrative court with their interpretation of the European Union cases.
I found that the newly incorporated Swedish law is not just stretching the boundaries set up by the European Union court, but it also legislates on matters not discussed by the Court. For example the Marks & Spencer case does not discuss or clarify matters of the size of the deduction, the currency to be used for the deduction or under which country’s law the deduction should be calculated. But the new law legislates on these matters. Also parts of the legislation are contradictory to the principles set out by the Court in the Marks & Spencer. The main principle of the Marks & Spencer being that if a subsidiary has exhausted all local remedies to make use of the loss, and still has not been able to do so, the parent company may deduct the loss of the foreign subsidiary, from its own taxable income.
The essay starts out with a brief summary of the Marks & Spencer case, as well as the Oy AA case. The legislation as well as the rulings of the Swedish administrative court will also be briefly summarized. The situation post-Marks & Spencer but pre-legislation will also be discussed to see what potential effects the legislation has. A short prognosis of the legislation will tie up the summary further on in the essay. Some of the predictions I make include the fact that this legislation will not suffice in the European state with the European market progressing as it is. The new legislation is in part discriminatory to the four freedoms established by the former Rome treaty and now in the Lisbon treaty as the legislation makes it less attractive to set up a parent company or a subsidiary company in Sweden.
Furthermore I found that the new Swedish legislation on deducting losses of a foreign subsidiary is not just stretching the boundaries set up by the European Union court, but it also legislates on matters not discussed by the Court. Also parts of the legislation are contradictory to the principles set out by the Court in the Marks & Spencer. In what I have called group three of the Swedish administrative courts judgements, I have summarized and analysed cases that are about a subsidiary wanting do deduct losses because the law in that particular state claims that a loss can only be set forward to be deducted from next year’s profits, for a maximum of five years. The court decided that it was not up to the Swedish nation to heal another
country’s “sick” law. This I find is contradictory to the Marks & Spencer case because if the subsidiary can prove that it has done all it can make use the loss for those five years, they have exhausted all local remedies and thereby this makes their loss deductible according to European standards.
Since the legislation came to be, The Lisbon treaty has replaced the former Rome treaty. The essay will also include a comparison of the two treaties to appreciate if the former Community law has changed with the onset of Union law. This is an important aspect of this essay because if the Union law differs from Community law, the relevance of the Marks & Spencer and the guiding principles that were derived from it would be null-and-void. After comparing these with each other I found that this was not the issue and that the community law discussed in the court rulings had been left unaltered with the onset of union law.},
author = {Rydén, Michaela},
keyword = {skatterätt},
language = {swe},
note = {Student Paper},
title = {Gränsöverskridande koncernavdrag},
year = {2012},
}